Bitcoin Drops to $86,000 After Bulls Lose Key Support

Despite heavy buying activity on derivatives exchanges, price action failed to stabilize, highlighting growing tension between aggressive traders and broader market sentiment.

The pullback came with a clear spike in volatility. Bitcoin was trading around $86,400 at the time of writing, down more than 3% on the day, while daily volumes surged as traders rushed to reposition. Market capitalization also fell below recent highs, reinforcing the sense that momentum has turned fragile in the short term.

Leverage builds up as price moves lower

One of the most striking developments during the drop was the scale of liquidations. Data shows more than $156 million in Bitcoin positions were wiped out in a short period, with long positions accounting for the overwhelming majority. Over $154 million in longs were liquidated, compared with just a few million in shorts, suggesting that many traders were caught leaning too aggressively to the upside.

At the same time, derivatives data revealed a sharp imbalance in order flow. Bitcoin’s taker buy-sell ratio on BitMEX briefly surged to extremely elevated levels, signaling intense market buying from traders attempting to catch a rebound.

Historically, such extreme readings often reflect late long positioning rather than the start of a sustainable rally. In this case, heavy buying failed to push price higher, increasing the risk of further downside as those positions come under pressure.

Charts show weakening momentum

From a technical perspective, the picture has also deteriorated. On the 4-hour chart, Bitcoin has been making lower highs and lower lows since failing near the $96,000-$98,000 area earlier this month. Momentum indicators are reinforcing the bearish tone. The MACD remains deep in negative territory, while the RSI recently dipped toward oversold levels before attempting a modest bounce.

While oversold conditions can sometimes lead to short-term relief rallies, the broader structure suggests caution. Unless Bitcoin can reclaim key resistance levels above $90,000, downside tests toward lower support zones cannot be ruled out. For now, price action indicates that buyers are struggling to regain control despite clear attempts to step in.

As the market digests the latest move, traders will be watching closely to see whether this drop marks a temporary shakeout or the start of a deeper correction.

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